GammaSwap is launching on Arbitrum and will lead DEX narrative to the next level.
They are innovating "impermanent gains", enabling users to trade on volatility.
A thread on GS potential and how to engage and become early users in this protocol.
@GammaSwapLabs @arbitrum $GS
They are innovating "impermanent gains", enabling users to trade on volatility.
A thread on GS potential and how to engage and become early users in this protocol.
@GammaSwapLabs @arbitrum $GS
This thread will discover and explain:
• GammaSwap functionality - the new primitive making gamma marketplace possible
• My bullish take - how it will play out in 2023
• How to participate now
As always, everything is in ELI5 format as I alr simplified content for all.
• GammaSwap functionality - the new primitive making gamma marketplace possible
• My bullish take - how it will play out in 2023
• How to participate now
As always, everything is in ELI5 format as I alr simplified content for all.
1. GammaSwap Functionality
GammaSwap increases profitability for liquidity providers (LPs) by creating gamma marketplace.
You should understand these by order:
• Current downsides of being LPs
• Definition of volatility & gamma
• how GS will help in solving this issue
GammaSwap increases profitability for liquidity providers (LPs) by creating gamma marketplace.
You should understand these by order:
• Current downsides of being LPs
• Definition of volatility & gamma
• how GS will help in solving this issue
Impermanent loss (IL) is the biggest downside of being LPs.
The ugly truth is that LPs always take IL when prices change, regardless of direction.
Your LP position will be worth less than holding the underlying tokens separately.
The ugly truth is that LPs always take IL when prices change, regardless of direction.
Your LP position will be worth less than holding the underlying tokens separately.
Example:
• When ETH price up 50%: IL is 2.02% (aka 2.02% less value than value if held)
• When ETH price down 50%: IL is 5.72% (aka 5.72% less value than value if held)
IL calculator ref: dailydefi.org
• When ETH price up 50%: IL is 2.02% (aka 2.02% less value than value if held)
• When ETH price down 50%: IL is 5.72% (aka 5.72% less value than value if held)
IL calculator ref: dailydefi.org
This happens because the present mechanic of AMMs (i.e. Uniswap) give users:
• Profit: Trading fees (volume)
• Loss: Impermanent loss (volatility or gamma)
LPs are selling volatility or short "gamma" (the more it moves, the more you lose) while gaining rewards from volumes.
• Profit: Trading fees (volume)
• Loss: Impermanent loss (volatility or gamma)
LPs are selling volatility or short "gamma" (the more it moves, the more you lose) while gaining rewards from volumes.
The current profit equation for LPs is:
Profit = Trading fees (Volume) - IL (short volatility or gamma)
To summarize:
• Get profit: Trading fees > IL (from short gamma)
• Get rekt: IL > Trading fees
Shitcoin LPs mostly get rekt due to high volatile yet lack of trading volume
Profit = Trading fees (Volume) - IL (short volatility or gamma)
To summarize:
• Get profit: Trading fees > IL (from short gamma)
• Get rekt: IL > Trading fees
Shitcoin LPs mostly get rekt due to high volatile yet lack of trading volume
To improve this situation, GS introduces a new variable into the equation called "long gamma," which increases LP profitability.
That is, they are now creating a "gamma marketplace" where users can long gamma.
Extremely innovative.
That is, they are now creating a "gamma marketplace" where users can long gamma.
Extremely innovative.
GS profit equation:
Profit = Trading fees - IL + Interest rate
Interest rate is determined be the fees paid by the long gamma side.
As a result, yield is always be greater than the underlying AMM i.e. Uniswap.
Profit = Trading fees - IL + Interest rate
Interest rate is determined be the fees paid by the long gamma side.
As a result, yield is always be greater than the underlying AMM i.e. Uniswap.
This has great potential because by the long gamma position enables users to:
• Trade on volatility of any token pair
• Create hedging strategies i.e. against rug pull or IL
Imagine how much money you could have saved if we had GS before the Dictum rug.
• Trade on volatility of any token pair
• Create hedging strategies i.e. against rug pull or IL
Imagine how much money you could have saved if we had GS before the Dictum rug.
2. My bullish take for GammaSwap in 2023
CT is now speculating the winner of DEXes on Arbitrum.
GS isn't just better tokenomic than others or community-owned protocol that type of xxx.
This is primitive.
You need to include $GS to your list of possible winners.
CT is now speculating the winner of DEXes on Arbitrum.
GS isn't just better tokenomic than others or community-owned protocol that type of xxx.
This is primitive.
You need to include $GS to your list of possible winners.
2.1 Roadmap
• Wrapped Pools (a two-sided marketplace for volatility from other Dexes)
• GS Native Pools
• Feeless DEX
• Vaults
I believe these are very promising.
All of them are feasible with great potential for mass adoption when taking into account its innovation.
• Wrapped Pools (a two-sided marketplace for volatility from other Dexes)
• GS Native Pools
• Feeless DEX
• Vaults
I believe these are very promising.
All of them are feasible with great potential for mass adoption when taking into account its innovation.
If you think you've found better ones, let me know; I'd love to hear yours.
But so far, tech-wise, I like @GammaSwapLabs the most.
But so far, tech-wise, I like @GammaSwapLabs the most.
3. How you can engage at this state
• Join its testnet
• Join discord to discuss and help protocol on several aspects i.e. feedback on UI
There is no token announcement yet but you know this is the best moment to participate. 👀
• Join its testnet
• Join discord to discuss and help protocol on several aspects i.e. feedback on UI
There is no token announcement yet but you know this is the best moment to participate. 👀
Current Testnet
You can try using GammaSwap: provide (short gamma) / borrow (long gamma) liquidity.
Try it in order to explore how you can make profit from "Impermanent Gains"
link: app.gammaswap.com (go to its discord for more info)
You can try using GammaSwap: provide (short gamma) / borrow (long gamma) liquidity.
Try it in order to explore how you can make profit from "Impermanent Gains"
link: app.gammaswap.com (go to its discord for more info)
TL;DR:
• New primitive: a two-sided volatility marketplace
• Users will be able to long gamma, creating profit from volatility
• Promising and feasible roadmap i.e. feeless dex, vaults
• Try joining its testnet 👀
• New primitive: a two-sided volatility marketplace
• Users will be able to long gamma, creating profit from volatility
• Promising and feasible roadmap i.e. feeless dex, vaults
• Try joining its testnet 👀
If you have any defi projects in mind, let's connect. I'm always happy to answer or discuss.
Feel free to share this thread with peers, and follow to be the first to learn about my next Arbitrum gems.
Feel free to share this thread with peers, and follow to be the first to learn about my next Arbitrum gems.
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